ABSTRACT
This chapter makes students familiar with the type and characteristics of shares. A share certificate issued in the correct manner is valid evidence of a member’s legal title to the shares covered by the certificate. In the event of a dispute over the lawful ownership of shares the name appearing in the Register of Members is to be taken as the true recording of ownership. There are several different types of shares which may be issued: ordinary, preference, deferred, bonus, and redeemable. Pre-emption rights are valuable in enabling a shareholder to retain his ownership proportion’ in the company but a private company may exclude the right from operating by means of a suitable clause in the memorandum or articles. Share capital is a guarantee fund for creditors. Many of the rules relating to payment for shares are intended to ensure that the company has a right to receive such payment, i.e. at least the nominal value of the shares issued.
